Jun wrap-up: Singapore in 5
? The FSSTI closed Jun 22 at 3,102.21 pts (-130.28 pts mom, or -4.03%).
? Rising inflation and supply chain issues continue to weigh.
? We maintain our end-2022F FSSTI target at 3,475 pts, based on a -1 s.d.
forward P/E of 12.5x.
No respite
The FSSTI closed Jun 22 at 3,102.21pts, down 130.28 pts mom (-4.03%), bringing the twomonth decline to nearly 8%, mirroring global indices as countries continue to grapple with
supply shocks and inflation. May 22’s NODX outperformed both our and consensus’
estimates, rising 12.4% yoy (vs. +6.4% yoy in Apr). Both electronics and non-electronics
NODX grew, due to increases in integrated circuits (ICs, +26.6% yoy), parts of ICs
(+116.3% yoy), and disk media productions (10.3% yoy); as well as non-monetary gold
(+344.4% yoy), specialised machinery (+26.4% yoy), and measuring instruments (+38%
yoy). Likewise, May’s industrial production was up 13.8% yoy (vs. +6.4% in Apr), due to
strong growth from electronics. Inflation continues to be a concern — May’s CPI came in
at another high (+5.6% yoy vs. +5.4% in Apr), with food costs as the primary demand driver,
following higher production costs and supply chain issues; nevertheless, we keep our
2022F inflation forecast at +5.1% yoy. According to data by the Urban Redevelopment
Authority (URA), monthly new private home sales increased by 105.5% mom and 51.5 yoy,
as two new development projects were launched. Resale home sales were mixed — data
from the Singapore Real Estate Exchange (SRX) showed private home sales rising by
1.6% mom (-11% yoy), while resale HDBs fell 5.1% mom (+9.7% yoy). Resale prices
continue to inch upwards, at +0.3% mom for private houses and +0.5% for HDBs.
Market and flows
Most sectors were down, save for Property and Utilities, while defensive sectors fared
better. Index movers were DFI and HKL, boosted by HK reopening somewhat post-Covid19 restrictions, HKL’s repurchase of shares and MINT’s divestment of a US data centre.
UOB, SATS and JM were the index laggards for the month, for no notable reason. SILV
(share buyback) and SML (new investment arm) joined DFI in the mid-large-cap
outperformers. GER (retracement from high), DCREIT and YZJFH were the
underperformers in the mid-large-cap space. In the preceding four weeks, institutional
investors were net sellers, divesting Financials and Telcos, while buying Developers and
REITs. Retail investors logged four consecutive weeks of inflows, concentrated mainly on
Financials and, to a lesser extent, Industrials and Telcos, with minor divestments in
Developers and REITs.
Corporate News
Privatisation offer for HWAH, by a group of substantial shareholders, has been revised
upwards from S$0.37 to S$0.40 per share. FPL offers S$0.70 per share to privatise
subsidiary FHT. KDCREIT to acquire two China data centres for RMB1.6bn (S$338.3m).
Research reports you should not miss
We initiate coverage on LHNL (Add, TP S$0.22), a leading provider of ISO tank logistics
services, currently poised to benefit from a pick-up in global trade activity, and YZJFH.
(Add, TP S$0.74) , a spin-off of YZJSGD’s fund management and debt arm, currently the
only Singapore mid-size cap proxy to fund management, with growth prospects from
leveraging on its strong China network.
Technical Perspective
Jun was a bad month for the FSSTI as it slid more than 4%. Despite a rebound mid-month,
momentum remained weak and formed a bearish flag. To add fuel to fire, the FSSTI dipped
below the 252 long-term EMA, officially putting the index on a bearish trend. The rejection
of the 22-EMA accelerated downside pressure on 30 Jun, and it is likely to break below the
support of 3110.85 pts. The next major support to watch in the mid-term is at 3024.66 pts.
